England and Wales High Court (Family Division) Decisions

IN THE HIGH COURT OF JUSTICE

		Royal Courts of Justice Strand, London, WC2A 2LL
		30th July 2015

1. I have been hearing an application for financial remedies made by the Applicant, Mrs FB (hereafter "the Wife") on 21st February 2014 following the breakdown of her marriage to the Respondent, Mr PS (hereafter "the Husband").
2. I will have to determine the exact quantum of the assets but they are somewhere between £18.2 and £19.7 million. The surprising feature is that there is virtually nothing at all in the name of the Wife. This is the case even though it is accepted that she was an equal partner in the family business. The only dispute is as to whether she was an equal partner with just the Husband or with his father as well. In any event, the business was sold for some £17.6 million as recently as 2012. Subject to the outcome of this case, her efforts have, in terms of capital, availed her not a penny.

The relevant history

3. The Husband was born on 25th July 1971 so he is aged 44. The Wife was born on 16th December 1972. She is therefore aged 42.
4. They first met when they were very young. The Husband left school aged 16 and did not complete his "A" levels. He thereafter investigated a number of possible ventures but I am satisfied he did not make any money out of them. The Wife, on the other hand, continued in education and obtained a degree from the LSE.
5. They started to discuss a business venture together as early as 1990. By 1993, they were in a personal relationship. On 6th March 1995, FV Limited was incorporated as a vehicle for their proposed business venture although they subsequently set up Co X on 7th November 1995. On 24th July 1996, Co X (Holdings) Ltd was incorporated. The business was, in the later stages, known as Co W. For reasons that I do not understand, the Husband became the sole shareholder and director on incorporation. This began the process by which everything was kept out of the Wife's name.
6. Co X was a telecommunications consultancy. It became extremely successful. It sold telecommunications equipment and networking systems to some very high profile companies, such as Monsoon and installed the systems in the various sites of the customers. Offices and shops were connected together. Telephone systems were installed. Credit card authorisation equipment was provided. The systems, once installed, were then serviced with engineers attending to fix problems on site. The business was highly technical but it was undoubtedly very profitable. The parties are entitled to enormous credit for what they achieved from scratch.
7. On 21st October 1996, the 1996 TS Settlement ("the TS Trust") was established by the Husband's father, "TS". TS settled £50,000 into the TS Trust and this was used by the professional Trustees to purchase the Husband's shares in Co X . Reliance was placed on the fact that TS was non-domiciled in this country. It is clear that the overriding factor in setting up the TS Trust was to protect Co X from CGT in the event of a sale of the company, which is something that was considered to be desirable, if the right price could be obtained, from the very outset.
8. The terms of the TS Trust are important. It is an interest in possession trust not a discretionary trust. The "Appointable Class" is wide but I take the view that the Husband and his direct descendants take centre stage. The first three categories are the Husband himself, his children and remoter issue and his spouses and former spouses as well as the spouses and former spouses of his children and remoter issue. It is only at (d) that there is reference to his sisters, JS and SS. His half-brother, M follows at (e). There is then provision for charities and such others as the TS Trustees shall appoint with TS's consent during his life.
9. "The Beneficiary" is the Husband. TS and his wife are "Excluded persons". There is the usual general power of appointment but, in default of appointment, the Husband is the life tenant and the income is to be paid to him for life. The Trustees have power to pay all or any part of the capital of the Trust to or for his benefit. He has power to appoint the income of the Trust to any spouse of his who may survive him. He subsequently appointed the Wife on 10th November 2003. Subject to that, the capital and income of the Trust Fund was to be held for such of the Husband's children as may be living at the expiration of the Trust Period or previously attain the age of 40. It is only in the event of there being no such children that there are ultimate default trusts to the Husband's siblings, namely 45% to JS and SS each and 10% to M absolutely.
10. It is now said by TS that Co X was, in essence, a three way joint venture between the Husband, the Wife and TS. I am satisfied that this was not initially the Husband's case although he has subsequently fallen in with it enthusiastically. The Wife says that this is nonsense and that Co X was a joint venture between her and the Husband. She accepts that TS provided valuable assistance, particularly as de facto "Treasurer" to the business until 2006 when a Finance Director was appointed. She argues, however, that he was more than handsomely remunerated for the work he undertook.

The marriage

11. The parties married on 20th August 1998 in London at what appears to have been a lavish event at the GDB Hotel. There are no children of the marriage.

AR

12. The Wife moved into the AR property in St John's Wood, London ("AR") following the marriage. The Husband already lived there. They resided there initially with SS. This appears to have been something about which the Wife, in particular, was not happy. The property was, in effect, owned by TS although it was inevitably held in an offshore Trust, the B Trust, via a company, A Ltd. TS had acquired the flat as a matrimonial home in 1982 so it predated the marriage by a long way.
13. The Wife says that, within a few months of the marriage, the parties began looking for their own property and placed an offer on a flat in Eton Avenue, Belsize Park. There is no doubt that TS saw the flat. It is equally clear that the purchase did not proceed. There is a conflict as to why that was the case. The Husband says he could not raise the purchase price. The Wife says that TS offered them AR as a "wedding gift" with SS moving out and a substantial refurbishment programme taking place to modernise the "tired" flat. Her parents corroborate her account. There is no doubt that the property was substantially refurbished. This was paid for by TS, although there is a dispute as to the exact cost of the works. During the works, the parties had to move out to rented accommodation in Abbey Road, again paid for by TS.
14. It is clear that, at the time of the refurbishment works, there was no change to the legal ownership of the property. The Husband and TS both say that, subsequently, changes to tax law made it disadvantageous for AR to remain in its existing legal structure. The family accountant, MD, took the advice of counsel, BM. As a result, in November 2003, A Ltd was liquidated and AR was distributed to the B Trust. The Husband purchased AR from the B Trust for £850,000 on 27th November 2003. This money had been gifted to him in two tranches of £425,000 each on 10th November 2003 by TS and his wife, LS, who is the Husband's mother.
15. The transfer by the Husband, however, "rested on contract". In other words, the transfer was not completed and it was not registered at the Land Registry. This appears to have been to delay payment of the stamp duty. Eventually, the sale completed on 10th May 2006 and the property was registered in the Husband's sole name. On 26th July 2006, the Husband took a mortgage for £1 million with the Mortgage Business. He subsequently made a loan of £980,000 to Co X at 12% interest. The Wife loaned £20,000 to Co X at the same time. The Husband says this was to provide working capital.

Co X

16. I have already noted that Co X was, overall, a tremendous success. Although I will have to make findings of fact in due course, there is no doubt that the parties both worked phenomenally hard. The Wife was an incredibly successful sales woman who secured enormously valuable contracts for the business. The Husband's role was, essentially, that of Chief Executive. Until 2006, TS performed the role of Finance Director. In that year, a full-time Finance Director was appointed although I accept that TS's involvement did not end.
17. For the year ending 30th April 1998, turnover had reached £1,564,187. Profit before tax was £278,590. Thereafter, turnover climbed steadily virtually every year to reach over £6 million by the mid 2000s and over £10 million by the late 2000s. Although there was a slight hiccough in 1999 and 2001, due to market conditions, profits also grew during the 2000s to reach just under £1.7 million in 2012 on turnover of £11.6 million. Between 2005 and 2012, net assets grew from £272,144 to £2,804,392.
18. The Husband and Wife, however, did not take large salaries. Using a broad brush, in the early 2000s, the Husband received just over £24,000 pa and the Wife just over £15,000 pa. From 1997 to sale of Co X in 2012, the Husband received total gross salary of £909,087 and the Wife £629,059. This was an average of around £57,000 pa for him and just under £40,000 pa for her.
19. This is to be contrasted with the remuneration paid to TS by way of "Management Charges" to TS's company, B Ltd. In total, TS received far more than the Husband and Wife put together. Between 1996 and 2013, the total Management Charges were £3,112,167. One of the reasons for doing this was that TS had a very significant Director's Loan Account in a holding company of B Ltd. He was therefore able to draw out the Management Charges tax free, although there would have been Corporation Tax on B Ltd's profits.
20. It is right to note that the TS Trust did receive a dividend of £2 million in the year ending 31st December 2010. Of this, £1.95 million was distributed to the Husband tax free by the TS Trust on 1st April 2010. The Husband then loaned this money to Co X on 12th August 2010 as working capital, charged by a debenture and at an interest rate of 12%. This was subsequently repaid to the Husband on the sale of the business by reassigning loans made by Co X to B Ltd to the Husband.

The loans to Co X

21. I have already mentioned some trading difficulties in the period 1999 to 2001. In addition, Co X acquired shares in dot.com type companies in the period ending 31st August 1999 in the sum of £683,147. There has been a dispute between the parties as to the reason for these investments. The Wife's case is that it was the sole initiative of the Husband. He and TS say that a major investment in a company called Vignette Ltd was made on the recommendation of the Wife's brother, DB, who also worked for Co X.
22. Initially, the shares increased in value significantly. Later, however, the dot.com bubble burst and, eventually, the shares were sold at a considerable overall loss. Indeed, in the year ending 31st August 2002, there had to be a write down of (£633,985) in the accounts for share losses.
23. The Wife says that these investments meant that Co X had spent its cash at bank and needed to secure short term loan funding. The Husband and TS find it difficult to accept that this played any part in the need for short term loans, saying that it was primarily the result of trading difficulties. They go on to say that Co X was unable to borrow commercially and therefore had to rely on family to loan money.
24. Loans came from three sources. The first was TS. The second was B Holdings Ltd. The third was from the Wife's father, and her brother, DB.
25. TS's loans took two forms. The first was short term sterling loans made unsecured and interest free. Between November 1995 and August 2002, these totalled £488,450. He was repaid £473,752. Most loans were repaid within months such that there was never more than £70,000 outstanding. Nevertheless, £170,000 was loaned on 3rd April 2002 although £71,273 seems to have been repaid the same day. The second form of loan was a loan made in October 2001 in the sum of CHF 650,000, which was £273,678 at the time. TS took a mortgage on his retirement home in Switzerland. The loan to Co X was not secured by debenture but was subject to interest at 12% pa. There is an issue as to this loan as the Wife says that TS made a significant profit on this loan due to the high rate of interest. She argues that the amount of profit made was the equivalent to £282,821. She also says that the loan cost Co X £551,133 and should have been repaid far earlier as Co X had more than sufficient money to do so. I will have to make findings as to this although as with many of the factual issues in the case, it is only very peripherally relevant to the division of the various assets.
26. The loans from B Holdings were made between June 2002 and August 2006. They totalled £750,000 but again no more than £250,000 was outstanding at any particular time. These loans were repaid in full with interest of £32,249. Most of them were repaid rapidly.
27. The loans from the Wife's family totalled £490,000. DB loaned £160,000 in November 1999 and was repaid without interest. The Wife's father, GB, loaned £130,000 in November 1999 and was repaid without interest on 13th April 2000. He loaned a further £75,000 on 17th February 2005 and £125,000 on 22nd March 2005. Both sums were repaid in May 2005 with interest.

The standard of living

28. There is no doubt that the standard of living enjoyed by the parties during the marriage was considerably higher than could have been achieved by their net salaries. It is equally clear that a significant part of their expenditure was funded by TS. Two issues arise. The first is the quantum of the financial support provided by TS. The second is one of credit. It is now accepted by TS and the Husband that this funding came from money paid to TS by Co X via B Ltd, effectively as a tax mitigation devise. The issue surrounds whether or not TS and the Husband attempted to mislead the court by claiming that this money came from TS's personal resources and was, therefore, an unmatched contribution.
29. In terms of quantum, it is fair to note that obtaining documentation going back to the late 1990s has proved very difficult for TS. For example, the credit card companies only keep statements for six years, although TS has managed to find some earlier statements. He produces an exhibit to his witness statement showing total expenditure by him on behalf of the Husband and Wife from 1998 to 2014 of £1,065,106 although there is additional expenditure set out in another schedule exhibited to the Husband's statement.
30. The figure of £1,065,106 includes "notional market rent" on AR of £410,036 from 1998 to 2005. It is difficult to see how this could be appropriate from 2003 to 2005, given the transfer of the property to the Husband in 2003, but, in any event, Miss Bangay QC for the Husband has rightly abandoned this claim. In closing, she argued that TS contributed a total sum of £787,082 to the parties' standard of living. The Wife does not accept that the figure was this high. She points out that many of the figures are weekly estimates. In any event, she says that the money was earned by them and merely channelled to them via TS for tax purposes.
31. In addition to the main claim, TS produces a schedule of the cost of the refurbishment of AR at £197,476 and furnishings for the property of £94,000. Both figures are estimates. The refurbishment cost is calculated on the basis of the cost per square foot of refurbishing such a property today, recalculated to the year 2000. There are various documents addressed primarily to the Husband showing the cost of the works at £130,000 but it is argued that these were estimates and the eventual cost considerably exceeded this figure.

The sale of Co X

32. I have already noted that it was an objective of the parties to sell Co X from an early stage. Tentative enquiries were made as early as 2006 and the business was put up for sale in 2007 in a project known as Bluebird. At the time, there were two possibilities. The first was an outright sale. The second was to secure a partial sale to venture capitalists. Depending on price, the first was considered preferable to the second. The Husband was amenable to continue to work in the business following sale or partial sale but it is clear that the Wife and, whatever his involvement, TS wanted out completely.
33. During 2008, an offer was made by a company called Co T for £14 million. The deal got to "one second to midnight" before it fell apart after Co T was acquired by the Pension Corporation who then attempted to renegotiate both quantum and structure.
34. In 2011, following further improvement in Co X's business performance, the parties placed the business back on the market pitching both to private equity and for a trade buy-out. This was known as Project Kingfisher. Various offers were received, some more attractive than others. There is an issue as to the extent of the Wife's knowledge of an offer made by a private equity company called Co I in December 2011, although this goes more to credit than the issues in the case. There is also a dispute as to various documents produced that state that TS had an interest in Co X. Co I was offering £13 million but part of the consideration would remain invested in the business. One email from a Mr PM at Co I dated 18th December 2011 states that TS would receive £4.55 million for 35% of the shares. The Wife would receive £3.25 million for 25% and the Husband would receive £3.25 million for 25% but would have to keep three quarters of that invested in the business. The remaining 15% would go to managers pursuant to an option scheme.
35. As it turned out, the Co I offer did not proceed. Serious negotiations then took place with JT. Unlike the Co I proposal, the offer from JT allowed the Husband to exit as well. The deal was signed on 31st July 2012 for total consideration of £17,672,000. Deeds of release were signed in relation to the various loans mentioned above but I do not need to consider this in detail as the position will emerge clearly when I consider the net assets in the case. Inevitably, JT required restrictive covenants to be signed by the Husband and the Wife. They also required them from TS. There was a three year non-competition clause. Somewhat surprisingly, it appears that TS continued to assist JT until January 2015 for, as I understand it, no remuneration. I do not believe, however, that his responsibilities took up a great deal of his time.
36. For the purposes of the assets schedule, it has been assumed that no Capital Gains Tax will be payable on the sale. If the position was successfully challenged, there would be CGT of £4.9 million payable but HMRC has not raised a query so far. The Husband's loans to Co X were not directly repaid. Surplus cash was transferred to B Ltd. Subsequently, the Husband's director's loan account with B Ltd was credited in the sum of £2.528 million.

The proceeds of sale

37. In essence, the proceeds of sale were paid to the TS Trust. There is no dispute that the Wife has received no benefit at all from the sale. It is clear that TS has also received no benefit; nor have the Husband's sisters, JS and SS. The only person who has benefited has been the Husband. He has benefited to a very considerable extent, albeit that the vast majority of this benefit has been by way of loan.
38. In total, the TS Trust has loaned the Husband £9,161,683 although £804,400 has been to discharge the costs of these proceedings, including orders made by me that he pay £515,000 towards the Wife's litigation costs pursuant to the changes made to the Matrimonial Causes Act 1973 by LASPO. Apart from one of the LASPO loans, no formal loan agreements have been entered. The loans are all interest free. No time is set for repayment. The non-LASPO loans were:-

(i) 08.08.2012 £ 350,000

(ii) 17.08.2012 £1,318,140

(iii) 27.06.2013 £ 650,000

(iv) 09.07.2013 £ 7,080

(v) 05.08.2013 £6,032,063

£8,357,283

39. The TS Trust has also made two capital appointments to the Husband. These were initially described as loans but were subsequently reclassified as capital appointments for tax reasons. On 14th October 2013, the Husband received €120,000 (£102,415). On 4th December 2013, he received €1,500,000 (£1,249,375).

The property acquisitions

40. In March 2012, P Holdings was established. This company is owned 100% by the TS Trust. On 27th March 2012, P Holdings Ltd purchased 4 SJC, London, NW8 for £1.197 million. A mortgage was taken of (£728,000) and a loan was made by the Husband of £469,000. The mortgage was subsequently redeemed in April 2013 by a loan from the TS Trust. The property is now valued at £1.4 million.
41. On 27th July 2012, a French company, SCI CP1 purchased an Apartment in Nice ("Nice 1") from TS for €1,902,251. The amount was paid by B Ltd but the TS Trust loaned the Husband £1,668,140 in August 2012 as set out above to enable this to happen. The loans were credited to the Husband's loan account with B Ltd. The shares in SCI CP1 are held equally between the Husband and his sisters, SS and JS. It is the Husband's case that TS intended to pass this property to all three of his children. TS says that the loan made by the Husband will be repaid by TS but he has been advised to delay repayment to minimise the prospects of French tax being payable on the transaction. The property is now valued at €1,757,000.
42. On 15th January 2013, the TS Trust loaned B Ltd the sum of £1.5 million. Interest was subsequently agreed at 4.5% above base rate. On 4th February 2013, 51B Ltd purchased 14 D Street, London for £1,369,469 inclusive of costs. The property was subsequently refurbished and then sold in August 2014 for £1,997,821. The TS Trust was repaid £1.5 million plus interest of £121,438 although I froze the money by an order I made on 14th July 2014. The profit on the sale was £241,882. This is in issue. The Wife says it belongs to the Husband. He says it is B Ltd's profit.
43. TS incorporated B Ltd on 6th October 1993. He was the sole shareholder. Originally, the company was involved in import and export, largely to Nigeria but this ceased when it became unprofitable. On 16th June 1999, he transferred the shares to his daughter, SS. On 8th May 2007, the shares were transferred again to JS.
44. On 12th August 2013, MP London, NW8 was purchased in the sole name of the Husband. The purchase price was £5,980,000 although £250,000 was also paid for various contents. The Husband obtained three loans from the TS Trust to pay for the purchase. The first was £650,000 to pay the deposit. The second was £7,080 for the surveyor's fees. The third was £6,032,000 to complete the purchase. Although the property had been purchased with loans from the TS Trust, no charge was executed on the property to secure the loans. In September 2013, the parties moved into the property. It is now valued at £6 million.
45. The final property acquisition was Apartment 27 Nice in December 2013 ("Nice 2"). A second French company was set up, namely SCI CP2. On this occasion, the shareholders were only the Husband (33%) and SS (66%) but this was because JS was unavailable to execute the necessary documents. SS is therefore holding 33% of the shares on JS's behalf. The property cost €1,200,000 but there were additional fees of €127,442. As indicated above, the TS Trust initially loaned €1,620,000 interest free to enable the purchase to proceed, to include some refurbishment works. This was treated as a capital appointment in the year ending 2014. The property is now worth €1,343,000.
46. There is an issue as to these French properties as their value is less than the loans taken to acquire them. In part, this is due to unfavourable changes in the Euro/Sterling exchange rate. I will deal with this in due course. At this point, I merely note that the parties have, in effect, swapped positions. Initially, the Wife was complaining that the Husband had given two-thirds of the shares in the holding companies to his sisters, arguing that the full value of the properties should be attributed to him. He argued that setting up the companies in this way merely fulfilled the wishes of TS and was a genuine transaction. His case was that only the loans should be included in the assets schedule. Once the value of the loans exceeded the value of the properties, the Wife argued that the full value of the loans should be included whilst the Husband said that it should be the value of the properties. Frankly, this sort of manoeuvring, although typical of financial remedy proceedings, does not do the parties any credit whatsoever.

The breakdown of the marriage

47. The parties had been undertaking marriage counselling for some time. One of the issues, unsurprisingly, appears to have been the fact that the Wife had virtually no financial security whatsoever, notwithstanding her immensely hard work over so many years. Not even MP had been put in joint names. In early 2014, they separated finally. The Husband left MP and returned to AR. The Wife has remained in MP ever since.
48. The Wife petitioned for divorce on 19th February 2014 and issued her Form A on 21st February 2014. The Forms E were exchanged in May 2014. The Wife's Form E, dated 14th May 2014 shows her with net assets of £128,822. This broadly consisted of savings that she had made from her salary whilst at Co X and jewellery including her engagement ring, purchased, it is now clear, by TS. She deposed to the central role she had played in establishing and developing Co X, stating that the genesis of the business was client relationships created by her before the marriage. She had taken a short term five month fixed contract with a company known as AV Ltd at an annual salary of £50,000 pa.
49. The Husband's Form E is dated 22nd May 2014. He deposes to net assets of £5,443,293 because the assets of the TS Trust were not included. He said this, however:-

"I am content for the TS Trust to be treated as my resource within these proceedings. However, it is unknown how much I will receive from the Trust, particularly given the overriding power of appointment referred to in Clause 2 of the Trust Deed."

50. Moreover, in an attachment to the Form E he said "[the wife] and I originally created the concept of the business together, although from the outset I was its managing director, while [the wife] focussed on a more technical/operational role. During the entire duration of the business, I was the director while [the wife] was not". It follows that he did not say that TS was a founder of Co X nor that one-third of its value was to be regarded as TS's. This position was repeated in his Schedule of Issues which said "Co X – this group having been originally established by the parties (with the Respondent Husband being 100% shareholder)…the Respondent Husband is content for the Trust to be treated as his "resource" for the purposes of these proceedings."
51. On 29th May 2014, the Wife amended her Form A to include variation of nuptial settlements. She applied on 3rd June 2014 for restrictions on the title of the various properties. She also applied on the same day to join B Ltd, P Holdings Ltd and SCI CP1 and SCI CP2 as Respondents. On 11th June 2014, Roberts J made restrictions against the various properties, with the Husband neither consenting nor opposing. She also joined B Ltd as Second Respondent. On the 30th June 2014, the Wife applied for maintenance pending suit to include litigation funding. On 9th July 2014, B Ltd applied to discharge the restriction against 14 D Street to enable the sale of the property to proceed.
52. The matter came before me on 14th July 2014. The issue of maintenance pending suit and legal funding had been resolved by agreement on an interim basis. The Wife was to receive maintenance pending suit of £15,000 for the period prior to 1st July 2014 and £11,500 pm thereafter but was to be responsible for the outgoings on MP. She was to receive £140,000 for legal fees within 28 days to take her up to the FDR. On the same day, I removed the unilateral notice and restriction on D Street to enable it to be sold. I directed that the loan due to the TS Trust on sale (£1,611,164 including interest) was to be repaid to the Trustees but the Trustees were forbidden from dealing with the money. I allowed B Ltd to keep the profit but on the basis that, if I considered it appropriate, I would notionally add the profit back into the Husband's assets. I therefore discharged B Ltd as a party.
53. Decree Nisi was pronounced on 22nd August 2014. It has not, as yet, been made Absolute.
54. On 12th November 2014, the Trustees of the TS Trust indicated that they owed fiduciary obligations to the wider class of beneficiaries which extend beyond the Husband and the Wife. If a joint approach was made by the parties to them to implement a consensual distribution, they said they would be hopeful that they would be able to provide assistance but they might need the blessing of the Royal Court in Jersey. They said that the TS Trust was not under the Husband's control but was under their control.
55. Specialist tax counsel, Emma Chamberlain has provided a number of opinions as to the tax situation. Her first opinion is dated 26th January 2015. Whilst the matter is clearly complicated, I propose to summarise it very broadly. She said that the Husband can receive capital payments without being subject to CGT provided he is foreign domiciled. He does not need to pay the Wife abroad. He can transfer MP or AR to her free of tax.
56. Following a failed private FDR, the Wife reapplied for maintenance pending suit and legal services funding on 16th March 2015. The application came before me on 17th April 2015. The Wife's position was that her application to vary the TS Trust should be adjourned with liberty to restore. The Trustees were considering an application to be joined but, in the light of the Wife's position, decided not to apply. I took the view that the proceedings should be conducted from that point to their conclusion for no more than £325,000 per side. The Wife's short term contract had ended. By agreement, I ordered maintenance pending suit of £13,700 pm from 1st April (the original award increased by the loss of the income from the short term contract). I adjourned generally the application to join the companies. Pursuant to section 22ZA, I directed litigation funding for the Wife of £375,000 (which included some arrears) payable in tranches. I made directions including open proposals by 21st and 28th May respectively. I gave permission for three further statements per party.
57. The Husband has filed statements from MD, the family's Chartered Accountant, MC, the family's solicitor and TS. The Wife has filed statements from her father, GB, her mother, KV and from a significant client of CO X, BH.
58. The statements of the Wife's parents and MD all go to the issue of the transfer of AR to the Husband. The Wife's parents both say that the Wife wanted her own home. The Husband and Wife came to dinner around the time they were looking to buy the flat in Eton Avenue and both told the Wife's parents that they were not going to buy the Eton Avenue property as TS had decided to give AR to the parties as a marriage gift. The Wife's father, GB adds that it is customary in the Sindhi Community (from which the Wife's family and TS, but not his wife, come) to provide a home for a son. He says he helped both his sons in this way.
59. The Chartered Accountant, MD, on the other hand, on behalf of the Husband, says that the ownership structure of AR was first considered in 1999 due to a tax case on the occupation of a trust property. It was sensible to transfer it to the Husband for reasons of Inheritance Tax but that TS regarded the Husband as the custodian of the property for the family.
60. BH, a client of Co X, on behalf of the Wife, says that the Husband and the Wife were the co-owners of CO X as a "husband and wife" team. He says it was theirs and no-one else's.
61. MC, a Solicitor of the Senior Courts, on behalf of the Husband, says that TS was part of the management and ownership structure of Co X. He was "a steady hand in the background" but had as much say in strategic decisions as the Husband and Wife. The Husband discussed having financial responsibility for his sisters. He envisaged a fair division of the proceeds of sale of Co X between himself, the Wife and TS and that he made this clear in meetings at which the Wife was present.
62. Finally, TS filed a long statement in which he said he was shocked by the Wife's statements in the case. Co X was built up by the Husband, the Wife and himself as a business from scratch and was sold after many years of extremely hard work between all of them. The fact that his ownership share was effectively placed in a family trust that he set up for the benefit of other generations did not in any way diminish his status within the company or his family's entitlement. He confirmed that AR was only transferred to the Husband for tax purposes and on the basis of an oral agreement that it would remain within the S family. He undoubtedly makes much of the financial contribution he made to the Husband and Wife's expenditure without any reference at all to the diversion of their income via his company for reasons of tax efficiency. In Paragraph 32, when dealing with his financial contributions to their living expenses, he even goes so far as to say that, without his financial support, one of them would have had to leave the business and obtain employment elsewhere, adding that he is "deeply offended by [the wife's] denial of the extent of my support…"

The respective open offers

63. The Wife's open offer is dated 20th April 2015. The assets are assessed as being worth £20 million and she seeks an award of £9 million. She does not spell out the reason for departure from equality apart from referring to the legal costs of a contested hearing. She sought a transfer to her of MP (£5,820,000) and a lump sum of £3,180,000. The maintenance award of £13,700 pm would continue until payment of the lump sum. The Husband should pay her outstanding legal costs. She would pay her share of any CGT incurred in relation to the sale of Co X to JT in the percentage she receives. There would be a clean break.
64. At trial, she argued for an equal division of the entire assets as I find them to be. She is perfectly entitled to do this. Now that Calderbank offers no longer feature in most financial remedy applications, the only way to be fair to litigants, whilst encouraging them to settle their litigation, is to be prepared to make awards in excess of a party's open offer where it is right and appropriate to do so.
65. The Husband's open offer is dated 28th May 2015. The net assets for division, after payment of the legal costs' loan obtained from the TS Trust are assessed at £18,520,301. It is argued that the value of AR should be deducted as non-matrimonial property. The Wife should then be awarded 40% of the remaining assets to reflect the interest of the wider beneficiaries in the TS Trust. The resulting lump sum is calculated at £6 million, although it is said that the offer is subject to the agreement of the Trustees. The money would be paid offshore as a lump sum with the Wife vacating MP on payment. The only subsequent amendment to the proposal is to reduce the lump sum to £5,800,000 to reflect the legal fees funding received by the Wife since the offer was made.

The Letter of Wishes and the position of the Trustees

66. On 9th July 2015, TS signed a letter of wishes in relation to the TS Trust for the first time. He says that the Husband, the Wife and he always considered themselves as partners in Co X. He recognises that he could not benefit from the TS Trust but says he was quite happy as he always thought that he was building up value for his children and future generations. As a result, the distributions should reflect the contributions to Co X, namely 1/3rd to the Husband; 1/3rd to the Wife; and 1/3rd for his other children, SS, M and JS.
67. Whilst I will return to this in due course, there are, inevitably, at least two difficulties with this letter of wishes. First, if 1/3rd was supposed to be for his other children, why does the TS Trust deed not reflect this? The Deed is clear that it was first for the Husband and his family to benefit. The assumption was that SS, M and JS would only benefit if the Husband had no descendants. Second, why has the only person to benefit since the sale of Co X been the Husband? I regret to say that I consider this very recent letter of wishes to be an entirely self-serving document.
68. On 13th July 2015, the Trustees wrote to set out their position to be "of assistance to the parties and the Court". The letter says that it was clear from the Trustees' perspective that CO X was run by TS, the Husband and the Wife almost in the form of a partnership between the three of them, each contributing their respective skills and considerable energies to seeking to secure the company's success. I am not at all clear how they would know that. At Paragraph 32, they say it was reasonable for them to apply up to approximately 40% of the Trust assets on assets that would retain value. I merely note at this point that far more than 40% has been so applied. Indeed, without the sale of D Street, the Trustees would only have retained £4.2 million in cash although the two recent legal fees loans totalling some £800,000 would have to be added to this figure. This is to be compared with approximately £9.7 million that has been made available to the Husband by a mixture of interest free unsecured loans and advances.
69. The note goes on to say that the Trustees will continue to make "most major appointments by way of loan rather than outright distribution". Finally, they say that, if a request is made for an appointment of capital rather than a loan, they would be unlikely to do so in the absence of a compelling reason or the assurance that the "wider PS family would benefit". I note that there is no mention of benefit to the Wife at all. As will become clear, I take the view that this note does not reflect the intention behind the Trust Deed when it was established by TS. It certainly does not reflect what has happened. I am quite satisfied that these Trustees have looked to the life tenant, namely the Husband, to the exclusion of everybody else. They have been prepared to loan him as much as he has wanted without any restrictions and with no security. This was perfectly acceptable given the Trust Deed but to say otherwise now is, at best, surprising.

The issues

70. I have heard the best part of a week of evidence. I have to say that much of it was very peripheral to the issues I have to determine although such peripheral matters can always be dressed up as going to credit.
71. As I see it, there are three main issues:-

(a) The quantification of the assets schedule. I have to determine three separate matters, namely the approach to the profit made on the sale of D Street; the approach to the value to attribute to the French properties (value of the loans or the net value of the properties); and whether or not a sum of £161,300 repaid to TS following the sale of Co X was actually an asset of the Husband?

(b) Are the entire assets of the Trust to be viewed as resources of the Husband/Wife or should a part be allocated to TS and/or the Husband's sisters and half-brother?

(c) How should I treat the value of AR?

The law

72. My powers are to be found in sections 23 and 24 of the Matrimonial Causes Act 1973. In deciding how to exercise those powers, I have to apply section 25 of the same Act. I have to have regard to all the circumstances of the case. I must have particular regard to the matters set out in section 25(2).
73. My overriding obligation is to be fair to both parties. In the absence of good reason to the contrary, the fruits of the marriage are to be divided equally (see White v White [2001] AC 596) and there is to be no discrimination between the spouses.
74. Three strands of award are identified in the case of Miller/McFarlane [2006] UKHL 24; [2006] 1 FLR 1186, namely sharing, needs and compensation. Compensation does not apply in this case. The resources of the parties are sufficient that, whatever award I make, the reasonable needs of each will be more than satisfied. This therefore leaves sharing.
75. A court hearing a case concerned with sharing has to identify an applicant's entitlement (or lack of it) to share in the parties' resources. This case is undoubtedly one where the sharing strand is fully engaged. The question is what are the matrimonial assets and to what extent is there good reason for departure from an equal division of those assets?
76. Subject to the points concerning the contributions of TS (both to Co X and in relation to AR), I am satisfied that both these parties made a full and equal contribution to this marriage. Is there non-matrimonial property as a result of TS's contributions? If not, is there good reason to depart from equal division as a result of the source of some of the matrimonial assets?
77. I was referred in particular to the well-known words of Lord Nicholls in Miller at Paragraph 22 of his speech as to the position of the matrimonial home where he says:-

"The parties' matrimonial home, even if this was brought into the marriage at the outset by one of the parties, usually has a central place in any marriage. So it should normally be treated as matrimonial property for this purpose. As already noted, in principle the entitlement of each party to a share of matrimonial property is the same however long or short the marriage may have been."

78. I remind myself that, just because an asset is matrimonial property, it does not automatically lead to equal sharing of that asset. At Paragraph 152 of Miller, Baroness Hale referred to this saying "the source of the assets may be taken into account but its importance will diminish over time". Mostyn J referred to this at Paragraph 9 of his judgment in S v AG [2011] EWHC 2637 (Fam); [2012] 1 FLR 651 where he said that "even the matrimonial home is not necessarily divided equally under the sharing principle; an unequal division may be justified if unequal contributions to its acquisition can be demonstrated".
79. In relation to the ownership of AR, Mr Dyer QC for the Wife referred me to the case of Tinker v Tinker [1970] P 136. Indeed, the quotation may have some relevance to the ownership of the shares in CO X as well. Lord Denning said:-

"…I am quite clear that the husband cannot have it both ways. So he is on the horns of a dilemma. He cannot say that the house is his own and, at one and the same time, say that it is his wife's. As against his wife, he wants to say that it belongs to him. As against his creditors, that it belongs to her. That simply will not do. Either it was conveyed to her for her own use absolutely; or it was conveyed to her as trustee for her husband. It must be one or other. The presumption is that it was conveyed to her for her own use; and he does not rebut that presumption by saying that he only did it to defeat his creditors. I think it belongs to her."

80. Finally, there are issues in the case as to the extent to which the various witnesses, including the Husband, the Wife and TS have lied to this court. First, I must decide whether or not any of them has deliberately told lies. If I find that they did, I have to ask myself why they lied. The mere fact that a witness tells a lie is not in itself evidence that relevant issues should be decided against that person. A witness may lie for many reasons. They may possibly be "innocent" ones. For example, they may be lies to bolster a true case; or to protect someone else; or to conceal some other disreputable conduct; or out of panic, distress or confusion.
81. It follows that, if I find that a witness has lied, I must assess whether or not there is an "innocent" explanation for those lies. However, if I am satisfied that there is no such explanation, I can take the lies into account in my overall assessment of the case and the issues I have to determine.

Quantification of the assets

82. There is a large measure of agreement as to the assets in this case. The structure is complicated by the various loans to and from the TS Trust. The court and the parties have had to be astute to ensure there is no double counting or omissions. The TS Trust itself has assets of £14,783,001 but this includes the loans owed by the Husband. A brief breakdown is as follows:-

(a) SJC (valued at £1,400,000

but subject to loans from the TS Trust

and the Husband) £ 212,837

(b) Debtors (of which the Husband is by far the

largest at £8,373,426) £ 9,121,917

(c) Cash (including D Street proceeds) £ 5,448,247

Total £14,783,001

83. There are four other properties, namely MP, AR and the two French properties. MP has a value of £6 million gross which is £5,850,000 after costs of sale. AR is worth £3,500,000 but is subject to the mortgage of (£1,002,424). The net equity after costs of sale is £2,410,076. There are then the two French properties. I will return to these properties below. In computing the value of these properties, it is important not to forget the loans made to the Husband by the TS Trust.
84. The Wife's assets are £53,139. Most of this is jewellery and cars, valued at £71,180 but she owes her solicitors (£43,322). The Husband has assets of £1,890,508 but liabilities of (£8,654,135) of which the vast majority are loans from the TS Trust but he owes his solicitors (£280,709) in unpaid costs. The combined effect of all the above gives an asset schedule of £18,421,242. This is the figure for which Miss Bangay contends. At this stage, I am making no determination as to whether or not part of the Trust should be allocated to TS and/or the wider S family.
85. I now turn to the areas of dispute. Mr Dyer argues that I should increase the above figure to £19,645,544. First, what value should be ascribed to Nice 1, the property previously owned by TS? The dispute here is £394,237. Second, should the same approach apply to Nice 2? This involves a dispute as to £426,883. Third, should I include the disputed amount of £161,300 transferred by the Husband to TS? Fourth, should the profit on the D Street of £241,882 be ignored?

Nice 2

86. I will deal with Nice 2 first. The SJE values it at €1,343,000. This is now equivalent to £952,482. Net of costs of sale, this figure is £904,858. The Husband, however, has a loan outstanding owed to him by the company of the amount he advanced which in sterling is £1,331,741. The Wife says this is the value I should take. I disagree. It is standard practice in financial remedy applications to value the assets as at the date of trial. This is only fair. Indeed, the value of 51A MP is lower than its total cost and the Wife accepts that this is the correct approach in relation to that property. Mr Dyer submits that the Husband has a bona fide loan on Nice 2 which will be repaid when the property value increases. First, if it does, the other assets in the case may equally have increased but that increase will not be taken into account. The most obvious example is MP that the Wife wishes to be transferred to her. Second, the value of Nice 2 may not increase and may, for whatever reason, have to be sold at a loss. I am quite satisfied that the Husband was not guilty of wanton dissipation when he acquired Nice 2. The vast majority of the loss is caused by the reduction in the value of the Euro. He could not have anticipated this change in exchange rates. The asset will be included at its current net value, namely £904,858.

Nice 1

87. Whilst the position is in most respects very similar in relation to Nice 1, there is also one important difference. The property is valued at €1,757,000 which is £1,246,099. Net of sale costs, this is £1,183,794. The loan, on the other hand, is now £1,578,031. I accept that the reasoning in relation to Nice 2 applies in exactly the same way in relation to Nice 1 apart from the fact that the intention of TS was to gift the property to his three children. TS accepted in oral evidence that he intended to repay to the Husband the amount TS received for the property. The only reason that he has not done this to date is his wish to place as much distance as possible between the purchase and the repayment for reasons of French tax.
88. My first reaction was that, if he did so, the benefit of the loan over and above the current value of the property would be a gift from TS to the Husband and therefore equivalent to non-matrimonial property. On reflection, I take the view that this is not the appropriate way to look at it. The gift to the Husband and his two sisters was the property. The loan arrangement was merely the way in which the purpose was achieved. Why should the Wife be significantly out of pocket just because TS has not yet repaid the loan due to the advice he has received? It is accepted that it will be paid. The Husband will therefore receive the repayment regardless of future changes in the value of Nice 1. Moreover, at that point, he will still have 1/3rd of the value of Nice 1 which I will not have taken into account in the schedules as it is clearly a non-matrimonial asset. I have therefore come to the clear conclusion that I should include Nice 1 at the Wife's figure, namely the loan outstanding from TS to the Husband. I will therefore add £394,237 into the schedule.

The £161,300

89. Turning to the issue of the £161,300, I am clear that this should not feature in the schedule. This was a sum of money credited to TS following the sale of CO X. It is right that the Husband accepted in his answers to the Wife's questionnaire that this "will be included as an asset of the Respondent". His accountants have since investigated this further and consider this to be a concession that was wrongly made. B Ltd owed CO X the sum of £476,082. This was written off by Co X but the sum of £476,082 was credited to the Husband's loan account with B Ltd following the sale of Co X. In the circumstances, it was only right that the sum of £161,300 owed by B Ltd to TS was repaid to him from the sum of £476,082.

The profit in relation to D Street

90. Finally, I am quite clear that the profit in relation to D Street should be included in the assets schedule as a resource of the Husband. It is quite clear to me that J, the legal owner of the shares in B International, had nothing to do with this development. The Husband found the property and invested part of the proceeds of Co X in acquiring it. He told the Wife in an email to her on 8th January 2014 that "as you know, the property was purchased a little over nine months ago and we have received an offer for £2 million yesterday. I have accepted this offer as it makes us a fair profit. Fingers crossed, the offer goes ahead with no problems. Those funds will then flow back into the trust."
91. The Husband could have chosen any vehicle to purchase the property. He only chose B Ltd as he had not managed to set up an alternative vehicle in time. The only point he can make to the contrary is that B Ltd ran the risk that the venture would lose money but this ignores the fact that B Ltd had the security of £500,000 loaned to it by the TS Trust from February 2013 to a date after the sale of D Street. If necessary, this sum could have been used to discharge any losses. I am quite satisfied that D Street was the Husband's venture and that it would be nonsense to ignore the profit which is clearly his. I do not accept that Mr Dyer needs to prove wanton dissipation. This is a resource issue. It was the Husband's project. His money was used. The profit should be attributed to him.

Revised position

92. When the case was opened, there was a small dispute as to jewellery, cars and personal belongings. Fortunately, the parties managed to resolve the matter so far as the assets schedule was concerned, although, regrettably, there may still be an issue as to contents. I urge the parties to come to a sensible agreement in that regard.
93. The assets figure of £18,421,242 set out in the schedule is increased by my findings above as follows:-

(a) Original figure £18,421,242

(b) Additional figure for Nice 1 £ 394,237

(c) Additional figure for D Street £ 241,882

Total £19,057,361

The witnesses

94. I now turn to the question as to whether the entire assets of the TS Trust are to be viewed as resources of the Husband/Wife or whether I should allocate a part to TS and/or the Husband's sisters and half-brother. I have come to a very clear conclusion as to this. Before I make my findings of fact, it is appropriate to make a few observations as to the veracity of the main witnesses.
95. At times, I did not find the evidence of the three main witnesses at all satisfactory. I consider the Wife to be the most reliable but there were parts of her evidence that troubled me significantly. She was described as a workaholic by more than one witness. She clearly devoted herself to Co X. She must have been devastated to find that, despite all her efforts, there was nothing tangible in her name to show for it. I am quite sure that she was an exceptional sales woman. I am satisfied that, without her drive and determination, the business would not have got off the ground. She secured the main contracts that enabled the business to flourish.
96. My concern as to her evidence is as to aspects that are in many ways peripheral to my decision. I find it impossible to accept that she did not know that AR was, from 2006, in the name of the Husband. I cannot believe that she really thought that the Husband had significant financial means prior to the start of Co X. In this regard, I do accept that he may well have played up his achievements in an attempt to impress her but she must have known that TS paid for half the wedding costs and was paying for the honeymoon and many of their other items of expenditure. I cannot believe that she did not know he was paying the costs of refurbishing AR. I reject her evidence that the parties were considering marriage from December 1993 but not did tell her father until the spring of 1998. I consider it was far more likely they started to talk of marriage in December 1997 and she told her father in early 1998.
97. Equally, I am sure she must have known about the Management Fees TS received and that part of this was channelled back to discharge much of the parties' expenditure. Finally, she denied emphatically that the Husband had purchased a Frank Meuller watch for her in December 2011 at the time the Co I proposal was made. Subsequently, the Husband produced the receipt dated 15th December 2011 in the sum of £8,000. The receipt showed clearly that she rejected the watch as it was not the one she had her eyes on. On 30th May 2013, the watch she wanted was purchased for her for €7,100. I cannot accept she had forgotten the first purchase. I consider it was a stupid lie as she wanted to hide knowledge of the Co I offer. I am clear that the Wife did know about the Co I offer. It would be amazing if she did not.
98. Having said that, I reject the Husband's evidence in this regard as well. I am sure he did not show her the emails that indicated that TS would receive the proceeds of 35% of the shares. He knew this would infuriate the Wife. Given that he had bought a very expensive car for her prior to the Co T sale that failed, I do not believe he would have made the same mistake a second time. The Wife's birthday was the day after he purchased the watch (16th December). I am clear that this purchase related primarily to her birthday.
99. The Husband's evidence, however, was considerably more unsatisfactory than that of the Wife. I have come to the clear conclusion that he has given me a false account of important matters such as the identity of the founders of Co X. He told me that TS set up the TS Trust as to two-thirds to the Husband and Wife and one-third to TS. This was a straightforward lie. In his email to the Wife on 8th January 2014, he could not have been clearer. He said:-

"To that end, it is clear that the bulk of our "wealth" is in the trust and MP)."

"It would be useful if we could achieve a few things. The first one would be to either change your class of beneficiary status to the trust and therefore you will have the same benefits as I do. Or we wait until the tax clearance is done and make an appointment to you of some description".

100. There was no mention of TS's interest. Indeed, if he had mentioned TS, he would have had to have said that TS cannot benefit. I have already referred to his Form E. In addition, he said he sought a clean break with a 50/50 division of the marital acquest but subject to the unmatched contributions of AR and the financial support provided to him by TS throughout the marriage, particularly in relation to Co X was fair. He did not claim TS was entitled as a founder member to 1/3rd of Co X. The same point can be made in relation to the Statement of Issues. The Husband now falls back on blaming his then solicitor and counsel but this is not open to him. He reinstructed his current solicitor, Mr David Pickering of DWF, who is extremely experienced in this work, shortly after the First Appointment. DWF was specifically asked about this point by Ms Bedford of Lee & Thompson for the Wife on 2nd June 2014. The reply was unequivocal. On 2nd July, it was said that "as to the trust, our client has made it perfectly plain that this is to be treated as a resource under his control available to satisfy any agreement or award within these proceedings, subject, of course, to appropriate tax treatment."
101. Indeed, even his contribution statement, as late as 14th January 2015, was clear that it was "intended to address the substantive and unmatched contribution [by TS] …in three specific areas, namely AR, living expenses and loans to Co X."
102. The evidence of TS was just as unsatisfactory. Miss Bangay in her closing submissions urged me to find that TS was an "obviously honourable man". I cannot accept that. I find that, like the Husband, he was attempting to mislead me as to a number of important issues. The most obvious relates to the payment of the expenses of the Husband and Wife. The Husband said in his statement that "…my father personally paid also for the bulk of our direct living expenses… [the wife] is fully aware that this was provided largely by my father's extraordinary and generous financial contributions." TS said in his statement that "I personally paid for the bulk of [the husband} and [the wife's] living expenses…I am deeply offended by {the wife's] denial of the extent of my support and lack of appreciation or gratitude for what I have done for her and [the husband]."
103. It was quite incredible that these statements were made without full disclosure that the money had been channelled to TS to save tax. I consider TS's evidence as to the formation of Co X to be just as misleading. He knew full well Co X was the Husband and the Wife's business. They were the ones with knowledge of the world of telecommunications. They had the idea and they set the business in motion. The shares were originally in the Husband's name, not jointly between the Husband and TS. When the TS Trust was established, TS excluded himself from benefit.
104. I accept entirely that TS performed a valuable function as, in effect, finance director and treasurer. He was a useful sounding board but it was the Husband and Wife who ran this business, albeit it with his assistance. He was handsomely rewarded for his efforts, even allowing for the payments he subsequently made on their behalf. His attempt to portray himself now as a founder is dishonest and does him no credit.
105. It is right that certain of the documents, particularly in relation to Co I, indicated that TS was a shareholder and would benefit. Some of these documents were, quite simply, wrong in that they indicated that TS was a beneficiary under the Trust. Others suggested he would benefit from the sale proceeds. I am sure this was the work of the Husband. On balance, I consider it was because he thought it would be more acceptable to Co I if Co I thought that TS had shares and was intending to retire along with the Wife. I remind myself that the Co I offer was on the basis that the Husband would continue to work for Co X and have 75% of his interest left in the business. This would not have worked on the basis of the true structure. I am, however, quite clear that the Wife would have been outraged if she had known about this. There is no indication at all that she saw these emails. Unlike many others, she was not copied in and they were not forwarded to her.
106. I have been troubled by the evidence of MC. He says that the Husband "clearly envisaged a fair division of the proceeds of sale between himself, [the wife] and [TS] who was responsible for the wider S family reflecting their joint ownership of the business. [The husband] often discussed with me and [the wife] how the proceeds of sale would provide security for his sisters, SS and JS". Although he is a solicitor, I cannot accept this evidence. I am going to be kind to him and say his memory has let him down. In the previous Paragraph, he says that TS "was part of the management and ownership structure of Co X". This is not right. TS was excluded from the ownership structure. MC knew this. In this regard, I fear MC has allowed himself to stray too far into the Husband's camp. I cannot accept that there were discussions between the Husband, the Wife and MC about how JS and SS would benefit. They had absolutely no involvement in Co X. They are both solicitors and SS is married. The Wife, nervous already about her lack of knowledge of the structure of the TS Trust, would simply not have accepted this. There would have been the most almighty row. In any event, it is simply not what has happened. The Husband is the only one to have benefited. He cannot rely on tax considerations. JS and SS could have been made beneficiaries and loans made to them. This did not occur because it was the last thing in the Husband's mind. I regret that, in this regard, I have been forced to conclude that MC is not a witness on whom I can rely.




My findings as to Co X , payments made by TS and the loans

107. My findings can be set out briefly. The founders of Co X were the Husband and the Wife. The Husband manoeuvred a situation where he was in complete control and the Wife, despite all her hard work, had, in essence, nothing.
108. TS provided valuable support and assistance to two young people building their own business but he was not a founder of that business and he is bound by his renunciation of benefit from the TS Trust. Individuals are entitled to take advantage of legitimate tax avoidance measures but they cannot renounce their interest and then say they retain it. Moreover, he was paid handsomely for his work. I accept the schedules that show that he received via B Ltd, management fees of £3,112,167 from 1995 to 2013. From 2009 onwards, he received £400,000 pa. The Wife got £662,059 gross in total from 1995 to 2013 and the Husband received £909,087 in the same period. I reject the suggestion that I should include the £2 million dividend. This money was reinvested in the business and does not come into the same category.
109. I accept that some tax has to be deducted from the amounts received by TS. I will use the figure of 23% given by TS, but I consider this generous to him as he will have been able to reduce this by expenses put through B Ltd. The net figure is therefore £2,396,368.
110. He did make payments on behalf of the Husband and Wife. I am going to exclude all the costs associated with the refurbishment of AR as I consider these come into a different category. Moreover, I am clear that the figure claimed of £787,082 is too high. It is very difficult to get documentation going back up to seventeen years but, for example, the Wife said she paid some service charge bills and I accept her evidence in this regard. The figures put forward by TS include weekly amounts for groceries and alcohol of £120 per week from 1998 to 2007. There is £400 per month in nightclubs and bars, £20 per week for coffees and lunch, £80 per week for eating out and £40 per month for takeaways. The Husband's haircuts and clothes' purchases are also included in a similar way along with dry cleaning. I accept that the Wife saved a significant part of her income but the Husband did not. He got £909,000 gross over the same period. I cannot accept that TS paid for everything which is what the schedule suggests. The Wife accepts expenditure of £320,972 but this is just the expenditure that has been proved by the production of documentation. The expenditure was more than that.
111. Doing the best I can, I consider the likely expenditure to have been around £500,000. This is about £35,000 pa. It means that TS benefited to the tune of £1,896,000 net from the management charges. This is some £135,000 pa. I consider this did compensate him fully for the considerable work he did but, in any event, this was the arrangement agreed and he cannot now complain. Indeed, I find he enjoyed working in Co X, as best shown by his continuing to work for the business for free after the sale until January 2015.
112. Finally in this regard, I must deal with the loans. I accept that significant loans were made unsecured by TS and B Ltd to Co X. Loans were also made, however, by the Wife's brother and father. It is clear that the business needed these largely short-term loans for a number of different reasons. The first was caused by the investment of significant amounts of cash in shares during the dot.com boom, much of which was subsequently lost. Each side has blamed the other. The Wife says it was the Husband's enterprise and fault. He blames her brother, DB. I cannot see that this is at all relevant. In business, parties must accept the good decisions that make money as well as the bad ones that lose money. I am, however, satisfied that another reason for the loans was trading difficulties around the turn of the century. I am equally satisfied that it proved difficult for the business to get third party finance.
113. I cannot, however, see how this assists me. It is not a reason for departure from equality. After all, both families provided assistance, although I accept that TS did so on considerably more occasions over a longer period, albeit usually for smaller sums. Nevertheless, everybody got repaid. If they wanted interest, they got it. Moreover, I am satisfied that TS made a significant profit on the Swiss Franc loan which was secured against his property in Montreux. Mr Dyer suggests it was as much as £282,821 and it is difficult to fault his logic. In addition, this particular loan cost Co X a sum in excess of £500,000 due to interest and changes in the exchange rate. In my view, the matter of loans is entirely neutral. It does not advance TS's case for an interest in the proceeds of Co X.

The effect of the Trust

114. Miss Bangay argues that, even if I come the conclusion that TS was not a founder member of CO X, I should still depart from equality to reflect the fact that the assets are in the TS Trust and the Husband does not, therefore, have unrestricted access to the money as though it was cash. I reject this submission. It is clear to me that the TS Trust is a resource of the Husband. His every request has been agreed by the Trustees. Although this has largely been by way of loan, the reason for that was fiscal. He was able to borrow £6 million to acquire MP in his sole name. The Trustees required no security and no interest has been charged. Overall, he has taken out far more than 50% of the sale proceeds of Co X. I do not accept that the position of his sisters and half-brother is relevant. The TS Trust was not for them. TS's letter of wishes is self-serving and wrong. There was never any intention that the siblings would have one-third of the proceeds of sale of Co X. Indeed, in the three years since sale, they have not benefited to the tune of even a single penny. This is in stark contrast to the provision made available for, to use the words of the Deed, "the beneficiary", namely the Husband.

AR

115. There are numerous evidential disputes as to the circumstances in which AR came to be owned by the Husband. I have to say that I consider most of them to be almost entirely irrelevant.
116. I did find the Wife's parents, GB and KB to be credible and impressive witnesses. They were telling me the truth as they recollected it. I consider that promises were made by TS at the time the parties were looking to buy the flat in Eton Avenue. It was these promises that induced the Husband and the Wife to abandon the search for an alternative property. I am quite sure that the Husband and Wife would have been in a position to buy the Eton Avenue property if they had wanted. They would have required the assistance of TS but it is clear that, in general, he was prepared to provide such generous assistance.
117. Instead, he convinced them to stay in AR. I am sure that he promised them that S would leave. I am also sure that he promised them that he would pay for the property to be refurbished to their requirements. I consider, on the balance of probabilities, that he also said he would transfer the property to them but I do not think this was an immediate promise. This explains why there was no transfer until 2003. I find that TS said he would do this in due course. In effect, he said he would see them right. I accept the evidence of GB that this is what Sindhi families do for their sons. They do not do so for daughters as it is expected that the family of the daughter's husband will do so.
118. I accept the evidence of MD that it was he who raised the issue of the ownership of the Avenue with TS due to the tax considerations. With the advice of specialist counsel, the decision was taken for the property to be transferred to the Husband in 2003 although the transfer rested on contract. It was only finally transferred into the Husband's name in 2006 when he needed to mortgage it to pay money into Co X.
119. I reject the argument that he holds the property on trust for his sisters. There is not a word of that in the contemporaneous documentation. I accept it would have given PPR difficulties if there had been a formal declaration of trust but I am satisfied that this was never remotely contemplated. After all, the Husband was able to mortgage the property in 2006 without any reference to S and J. Moreover, the mortgage was not repaid on the sale of Co X and is still outstanding today.
120. AR was therefore the matrimonial home for some fifteen years. Given the dicta of Lord Nicholls, I can only find that it is matrimonial property but I do not accept that this means that it is to be shared between the parties. AR was not acquired by the parties themselves during the marriage. It had been a matrimonial home of TS and his wife, since 1982. The Husband and his siblings were brought up there. The transfer itself is a very significant unmatched contribution, now worth some £3.5 million gross.
121. In exactly the same way, the cost of the refurbishment works was a large unmatched contribution. I have already found that TS was properly remunerated for his work with Co X, even after deducting the living expenses of £500,000 that he paid on behalf of the Husband and Wife. I did not include the expenses of refurbishing AR when I made this finding. Indeed, these costs came at a time when the management fees paid to TS were far lower than they became later when CO X was far more successful.
122. I recognise that the cost claimed for the refurbishment works of £197,476 is calculated on the basis of a charge per square foot. The furnishings schedule consists of nothing more than guesstimates. Nevertheless, I have the original quotation in the sum of £130,000 and I accept that changes will have been made that will have led to additional cost. After all, the length taken to do the works increased significantly to some fifteen months. There is no dispute that top of the range furniture was purchased. Moreover, TS had to pay the costs of the rent of the alternative flat in Abbey Road during the works. Doing the best I can, I assess the total cost as being:-

(a) Works £175,000

(b) Furniture £ 75,000

(c) Rent £ 37,500

Total £287,500

123. Moreover, I am sure that the works will not have increased the value by anything like the full amount spent. The Husband is therefore entitled to a significant departure from equality to reflect these unmatched contributions.
124. The question then is whether or not I simply deduct the entire value of AR before I undertake the sharing exercise. The Wife makes two points in response. First, she says that £1 million was invested in Co X and thus became an integral part of the matrimonial assets. This is true but she has benefited from this as it undoubtedly helped Co X. Second, she says that, as a result of the gift of AR, the parties did not buy their own property which would have appreciated significantly in value in accordance with the dramatic increases in the property market in London since the turn of the century. She has produced a schedule suggesting that the flat in Eton Avenue might have increased by around £1.4 million since the parties abandoned the decision to acquire it. I consider there is force in this last point. I am sure the parties would have purchased another property had AR not been gifted. This does not, however, detract from the very significant unmatched contribution made by TS in relation to AR.
125. There are, of course, two ways in which a court can approach the matter. The first is to allow a discount to equal sharing to reflect this unmatched contribution. The second is to remove an appropriate share of the value of AR from the matrimonial assets to reflect the unmatched contribution and then divide the figure that is left equally. I propose to approach the matter on the second basis and then check it by undertaking the first exercise.
126. I am satisfied that it would be wrong for me to allow sharing of the full £1.4 million "lost" by reason of non-investment in the property market or anything like it. I have decided that an appropriate way to mark the fact that AR is matrimonial property is to include the sum of £500,000. This means that I will remove £2,912,500 from the schedule. This is the value of AR less the costs of sale and the sum of £500,000. I have ignored the mortgage as that money is reflected in the rest of the Husband's assets.
127. I assessed the assets as being worth £19,057,361. If £2,912,500 is removed from the schedule, the sum of £16,144,861 remains. Given my findings, this figure should be shared equally. The Wife would receive total provision of £8,072,430.
128. On the second approach, the assets would remain at £19,057,361. The first calculation gives an award to the Wife of just over 42% of that figure. I am satisfied that this is an appropriate division of the assets to reflect the unmatched contributions made to AR by TS.

Conclusion

129. The Wife wants me to transfer MP to her. This is resisted by the Husband although I cannot understand why. I accept that the property is likely to be in excess of her reasonable needs but this is entirely a matter for her. MP will be transferred to her at a net value of £5,850,000.
130. She has assets of her own of £53,139 on the basis that the Porsche 997 and the Mercedes are transferred to her. There will then be a lump sum of £2,169,291. I propose payment in two months. The interim maintenance will continue until the due date for payment after which interest will accrue at the High Court Judgment Debt Rate. The orders for security will continue pending payment in full and will then stand discharged.
131. There will have to be the tax indemnity as proposed by Emma Chamberlain and drafted by her at joint expense. As the Wife is receiving one-half of the proceeds of Co X, the indemnity will be for 50% as the departure from equality to reflect AR has no relevance to this aspect. There will be a clean break but the Wife's claims will only be dismissed on payment in full. The Wife's application to vary the Trust will be adjourned generally but dismissed once the lump sum has been paid.